What is neoliberalism? Neoliberalism (a.k.a. The Washington Consensus) is the dominant ideology of the political class in Washington D.C., shared by both legacy parties. In fact, it’s not clear there is another ideology, which is why we get seemingly weird policymaking processes like RomneyCare morphing into ObamaCare, even as proponents of each version of the same plan hate each other, “narcissism of small differences”-style. Of course, in neo-liberalism’s house are many mansions, many factions, and many funding sources, so it’s natural, or not, that an immense quantity of obfuscation and expert opinion has accumulated over time, making for many fine distinctions between various shades of neo-liberalism.

In this brief post, I hope to clear the ground by proposing two simple rulesto which neo-liberalism can be reduced. They are:

Let’s start with the dull stuff, because pragmatism. … Linguists are callingthe “prepositional-because.” Or the “because-noun.” [For example:] But Iowa still wants to sell eggs to California, because money. It’s a usage, in other words, that is exceptionally bloggy and aggressively casual and implicitly ironic. And also highly adaptable. … it also conveys a certain universality. When I say, for example, “The talks broke down because politics,” I’m not just describing a circumstance. I’m also describing a category. I’m making grand and yet ironized claims, announcing a situation and commenting on that situation at the same time. I’m offering an explanation and rolling my eyes—and I’m able to do it with one little word. Because variety. Because Internet. Because language.

Because neo-liberalism. Because I like the idea, a lot, of catching the Mount Pelerin Society, Pinochet, Diane Rehm, the Friedmans, Joe Biden, Rush Limbaugh, and the people who drafted the Democratic platform in one big net, and then deep-sixing the entire squirming and gesticulating political class with language that’s “exceptionally bloggy and aggressively casual and implicitly ironic.”

And this tactic really is fair. Trap a neo-liberal in conversation next to a whiteboard, or hand them a napkin, and you can probably coax them to “educate” you by drawing the famous “Because Markets” diagram, which looks like this:

Figure 1: “Because Markets”

And when your targeted neo-liberal is done sketching, they will express the idea, with varying degrees of quasi-religious fervor, that the price set by the intersection of the downward-sloping demand curve and the upward-sloping supply curve is the right price.

But by “right,” your neo-liberal interlocutor will not mean right mechanically or arithmetically, but right morally; that is, the best of all possible worlds will be created when there are no pesky artificial factors interfering with the frictionless operation of the sacred curves. Note, however, that by the asymmetry of Context #1, Figure 1 does not apply to the neo-liberal practitioner themselves, nor, by the asymmetry of Context #2, to the class of people who own the markets in which the prices are set. So, if unions raise the price of human rental, that’s not just an ordinary bargaining process, it’s wrong, even evil: It’s a defilement of the sacred curves. But if a squillionaire uses their power to bust that same union, that’s not merely no problem, it’s not even part of the problem (by Context #2). Hence, we have the pleasant and realistic outcome that the price of a Walmart worker’s time isn’t enough to live on, the price of the (no doubt credentialled) neo-liberal practititioner’s time is somewhere in, er, the “middle,” and the price of a squillionaire’s time is so high they buy grotesquely expensive homes and forget they own them. Because markets.

Lawmakers who wrote the Affordable Care Act fell for [assuming good faith] the health insurance industry’s insistence that Americans want “choice and competition.” [Rule #1, which lawmakers share with insurers.] Having worked in that industry for two decades, I know the real reason insurers and their allies kept reciting the “choice and competition” mantra was to scare lawmakers away from even daring to give serious thought to a single-payer health care system [which is a Rule #1 violation, at least in for citizens seeking treatment].

And I also know that insurers benefit from the marketplace confusion that “choice and competition” can create. I can assure you that some insurers are counting on you becoming overwhelmed by all the choices and picking a plan that might appear at first glance to be a bargain. But beware: if you’re not careful and pick a plan without really kicking the tires, you very possibly will be buying something that could wind up costing you much more than you ever imagined if you get sick or injured.

That happened to my friend Donna Smith, who as executive director of the Health Care for All Colorado Foundation, knows more about health insurance than most of us. She spent quite a bit of time last fall on the Colorado exchange trying to figure out which plan would offer the best value for her and her husband. If she had to do it over again, she would have taken the additional step of calling the insurance companies directly after reviewing the plans they were offering on the exchange, just to be certain of what her out-of-pocket obligations would be if she had to be hospitalized during the year.

A cancer survivor, Donna knew there would be a chance she might get sick again and need expensive care [Rule #2]. It never occurred to her, though, that picking a gold or platinum level plan with a higher premium would likely have been better deal than the silver Kaiser Permanente plan she opted for and that seemed to be more affordable.

To make shopping for coverage even more challenging, Kaiser and most other insurers offer several silver plans on the Colorado exchange, so Donna had to spend time trying to figure out which silver plan would be the best deal.

Donna told me the she took the time to compare the monthly premiums, co-pays and annual deductibles of each of the silver plans before making her decision. “I felt that the one I chose offered the most coverage I could afford with my premium buying dollar,” she said.

Sure enough, within days after the plan went into effect on January 1, Donna got sick and was hospitalized for a week.

To her shock, she later found out some limitations of her coverage that made her overall financial responsibility much higher.

You can see that Smith really was making a life-and-death choice when she purchased insurance in the “Marketplace” designed by insurance companies. And if you multiply Smith’s story by millions nationwide, you’ll see that those are not good at manipulating the market to their ends, or don’t have the hours to spend that Donna does, are more likely to have lethal outcomes from their choices — choices they are mandated to make only so that parasitical health insurance rent extractors can make a buck — than those who have better skills, or have the hours to spend, or who have their insurance purchased for them by trusted agents. Statistically, and actuaries no doubt can calculate this sort of thing, a percentage of the insured will not make the choices that will get them the care they need, and, again statistically, a certain percentage of those will lose their lives. Because markets.

Fairfax County, Va., and McDowell County, W.Va., are separated by 350 miles, about a half-day’s drive. Traveling west from Fairfax County, the gated communities and bland architecture of military contractors give way to exurbs, then to farmland and eventually to McDowell’s coal mines and the forested slopes of the Appalachians. Perhaps the greatest distance between the two counties is this: Fairfax is a place of the haves [Contexts #1 and #2], and McDowell of the have-nots. Just outside of Washington, fat government contracts [that is, through policy choice] and a growing technology sector buoy the median [!!] household income in Fairfax County up to $107,000, one of the highest in the nation. McDowell, with the decline of coal, has little in the way of industry. Unemployment is high. Drug abuse is rampant. Median household income is about one-fifth that of Fairfax.

One of the starkest consequences of that divide is seen in the life expectancies of the people there. Residents of Fairfax County are among the longest-lived in the country: Men have an average life expectancy of 82 years and women, 85, about the same as in Sweden. In McDowell, the averages are 64 and 73, about the same as in Iraq….

Since the 1980s, “socioeconomic status [class] has become an even more important indicator of life expectancy.” That was the finding of a 2008 report by the Congressional Budget Office. But dollars in a bank account have never added a day to anyone’s life, researchers stress. Instead, those dollars are at work in a thousand daily-life decisions [like Donna Smith’s]— about jobs, medical care, housing, food and exercise — with a cumulative effect on longevity.

“Why might income have an effect on morbidity or mortality?” said David Kindig, an emeritus professor at the University of Wisconsin School of Medicine and an expert in longevity issues. “We have these causal pathways, through better jobs, better health insurance, better choice of behaviors, he added. On top of that, “there’s the stress effects of poverty and low educational status.” …

[T]he contrast between McDowell and Fairfax shows just how deeply entrenched these trends are, with consequences reaching all the way from people’s pocketbooks to their graves.

[3] Via a podcast from sadly decayed New Yorker. It’s quite a treat to hear Herzberg and Remnick gradually allow themselves to dimly understand that they know literally nothing of the experience of the average person buying Obamacare because they have never had to buy their own insurance since they get it corporately (see Context #1).

[4] Again from Lowrey, a fine example of Rule #2:

“These things are not nearly as clear as they seem, or as clear as epidemiologists seem to think,” said Angus Deaton, an economist at Princeton.

Just doing his job….

UPDATE Adding, I’m not claiming that I’ve synthesized the neo-liberal literature. My claim is that if you engage a neo-liberal in conversation on policy (“at the whiteboard”), at some point you will be able to reduce what they say to rule #1 as a premise and rule #2 as an injunction, given the asymmetrical contexts #1 and #2. It’s rather like the famous headline “Ford to City: Drop Dead,” but on a society-wide scale, and with the 0.01% in the place of Ford.

About Lambert Strether

Readers, I have had a correspondent characterize my views as realistic cynical. Let me briefly explain them. I believe in universal programs that provide concrete material benefits, especially to the working class. Medicare for All is the prime example, but tuition-free college and a Post Office Bank also fall under this heading. So do a Jobs Guarantee and a Debt Jubilee. Clearly, neither liberal Democrats nor conservative Republicans can deliver on such programs, because the two are different flavors of neoliberalism (“Because markets”). I don’t much care about the “ism” that delivers the benefits, although whichever one does have to put common humanity first, as opposed to markets. Could be a second FDR saving capitalism, democratic socialism leashing and collaring it, or communism razing it. I don’t much care, as long as the benefits are delivered.
To me, the key issue — and this is why Medicare for All is always first with me — is the tens of thousands of excess “deaths from despair,” as described by the Case-Deaton study, and other recent studies. That enormous body count makes Medicare for All, at the very least, a moral and strategic imperative. And that level of suffering and organic damage makes the concerns of identity politics — even the worthy fight to help the refugees Bush, Obama, and Clinton’s wars created — bright shiny objects by comparison. Hence my frustration with the news flow — currently in my view the swirling intersection of two, separate Shock Doctrine campaigns, one by the Administration, and the other by out-of-power liberals and their allies in the State and in the press — a news flow that constantly forces me to focus on matters that I regard as of secondary importance to the excess deaths. What kind of political economy is it that halts or even reverses the increases in life expectancy that civilized societies have achieved? I am also very hopeful that the continuing destruction of both party establishments will open the space for voices supporting programs similar to those I have listed; let’s call such voices “the left.” Volatility creates opportunity, especially if the Democrat establishment, which puts markets first and opposes all such programs, isn’t allowed to get back into the saddle. Eyes on the prize! I love the tactical level, and secretly love even the horse race, since I’ve been blogging about it daily for fourteen years, but everything I write has this perspective at the back of it.

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50 comments

My favorite quote regarding supply-demand curves goes something like “Like unicorns, supply-demand curves are often drawn but never seen in reality”. From the book Economyths. A highly entertaining and readable debunking of neoclassical economics theory.

What a superb post! I particularly enjoyed how you correctly identified “parasitical rent extraction” as the preferred modus operandi of the 1% and their enablers.
How could we boil down an ideology opposed to neoliberalism?
1) Because humanity. We are all brothers and sisters who should care for one another.
2) Go live in joy and harmony. Caring for one another, and the health of our environment, we can enjoy living and creating together in an atmosphere free of undue stress and strife.

Absolutely. Now go read the story about “How One City turned Poverty into a Prison Sentence” in the links section. It is a case study of rent extraction with jail as the final profit making solution when the poor are sucked dry. Money and politicians have so corrupted our democracy that it has become predatory. The political system is broke and I really don’t see any real solutions to breaking the grip of those corrupting the system.

I haven’t had time to read much of what’s in NC today, but I did read part of the Poverty/Prison article. Absolutely infuriating! When people can’t pay their fines, community service should be an option. But I guess private companies don’t make any profits from community service.

“The political system is broke and I really don’t see any real solutions to breaking the grip of those corrupting the system.”

“I can UNDERSTAND pessimism, but I don’t BELIEVE in it. It’s not simply a matter of faith, but of historical EVIDENCE. Not overwhelming evidence, just enough to give HOPE, because for hope we don’t need certainty, only POSSIBILITY.”-Howard Zinn

I think “because markets” was abetted by the Left-Liberal “postmodern turn” of the 1970s and 80s. The Civil Rights and Anti-War movements had a hard moral center. Biting into them could crack teeth. Postmodernism and certain kinds of multiculturalism were gooey all the way through. They allowed the professoriate and the outside intellectuals to not have to make moral distinctions and moral choices. Everything could be analyzed (thus boosting publication output) and no hard work of condemnation, organization, or resistance need happen, because language was indeterminate, morals relative, and knowledge suspect. Surrender to the market was a way for a bunch of soft, queasy people to not have to make hard choices and defend them (such defense, in the ideological mood of the day, being a sign of a lack of “sophistication”, “philosophical rigor”, and “nuance”, and an indicator of “crude” thinking–in other words, you’d be seen as a naive dunce not worth being granted tenure).

And, if you were one of those profs who could parlay the latest methodology into a big, splashy list of publications and exploit the burgeoning star system, the market was very, very good to you. So why ask such vulgar materialistic questions about economic outcomes when you could add a gay black woman to your syllabus and feel like you were “exploding the canon”, “fighting the power”, and “sticking it to the Man”?

“Universities no longer train students to think critically, to examine and critique systems of power and cultural and political assumptions, to ask the broad questions of meaning and morality once sustained by the humanities. These institutions have transformed themselves into vocational schools. They have become breeding grounds for systems managers trained to serve the corporate state. In a Faustian bargain with corporate power, many of these universities have swelled their endowments and the budgets of many of their departments with billions in corporate and government dollars. College presidents, paid enormous salaries as if they were the heads of corporations, are judged almost solely on their ability to raise money. In return, these universities, like the media and religious institutions, not only remain silent about corporate power but also condemn as “political” all within their walls who question corporate malfeasance and the excesses of unfettered capitalism.”http://www.truthdig.com/arts_culture/item/the_death_of_the_liberal_class_20101029

Universities used to teach only a small number (5% when I went) and HE has expanded to a target of 50%. I don’t wear the better days argument implicit in this. Standards have dropped so far it’s hard to teach anything conceptual and most staff wouldn’t be up to it. I suspect universities were never much good and people got better education in jobs with decent firms. And what of virtue ethics and other such clap-trap? Most of the prats who came up with that didn’t challenge slavery. The German elite got bildung which helped them not at all to resist the Nazis. Scientists get none of that rot and turn out more generally ethical and leftist than the rest of HE output.

I think that’s very perceptive and I agree. I always knew the deconstructionists were up to no good — readers will correct me but my impression is they destroyed English Department after English Department — but your comment reminds how very no good their “no good” was.

Agreed.
They destroyed English departments, but the destroyers got tenure tracks and a lot of goodies, so perhaps like death by carbon monoxide poisoning, they were largely (and arrogantly, in a few cases that I’ve seen UpCloseAndPersonal) oblivious of the harm their sanctimonious behavior created.

Krugman writes: “economic opportunity has shriveled for half the population.” I’d like to see a little acknowledgment that NAFTA had something to do with that. And since trade is Krugman’s bailiwick, I’d like to see a full-throated denunciation of TPP, instead of that lame promise to do “homework” (in his own field?!) followed by a nothing-burger of a column.

Krugman talks a good game. He’s still a card-carrying member of the political class, and a supporter of ObamaCare, which is a “Because markets. Go die!” solution if ever I’ve seen one, which is covered in the post….

Of course he’s a member of the political class! You don’t get to write for the NYT if you aren’t–not any more. Look the mainstream Party Line is the only game in town. Who will be there for him when he loses his place at the table? The left has not made it easy for people to turn left–where is the funding, the organization and so on? The mainstream Washington consensus is all there is right now–TINA is a reality because the left perpetually sleeps and believes that cries of “it’s not fair!” are enough.

Neo-liberal is a wuss phrase invented by guilt ridden liberals to avoid using the word that truly describes the state of affairs.
“Fascism should more appropriately be called Corporatism because it is a merger of state and corporate power”
― Benito Mussolini
“We have buried the putrid corpse of liberty”
― Benito Mussolini

Please don’t think that I am defending either Neo-Liberalism or Fascism; I’m not. Both are odious. But it’s not clear that Mussolini actually said that about corporatism, since that appears to be a mistranslation of the Italian word “corporatzione” See WikiQuote on Mussolini’s Disputed Quote:

“Fascism should more properly be called corporatism, since it is the merger of state and corporate power.”

This misunderstanding of the meaning of ‘corporatzione’ spread rapidly in the United States after appearing in a column by Molly Ivins (24 November 2002). It is repeated often and sometimes attributed to the “Fascism” entry in the 1932 Enciclopedia Italiana, but does not appear there. See “Mussolini on the Corporate State” by Chip Berlet which discusses the corporatzione – councils of workers, managers and other groups set up by the Fascist Party to control the economy and everyone in it.

Here’s the Chip Berlet article. Since I don’t speak Italian, I don’t know what the truth about this is. Perhaps an NC reader who is fluent in Italian can comment for us.

Fascism’s corporativismo was something altogether different — the corporazioni were State-mandated guilds; it’s another story, entirely. What we have in the US, instead, is a system governed by an ever more oligarchically-diseased, and outwardly aggressive, bureau-technocracy, which, internally, presides over a gradual privatization of public-functions, a sweeping commercialization of all spiritual endeavors (higher learning and the arts), and a virtual monopolization (corporatization) of all economic activity.

Thepolitical idea of “corporatism” was not original to Mussolini, but is far older. In shortest form, a “corporatist” state was one in which persons were represented as members of a particular class, as opposed to a “representative state” where persons were represented as residents of a particular geographical community. In crude form, plumbers would be represented in the councils of state by a plumber, veterinarians by a veterinarian, etc. The Wikipedia article under this entry describes some of the 19th century intellectual history of this political idea

Agreed. Totally trendy and juvenile. Belongs in the same category as “Let’s do lunch.” English is a rich language, offering many word choices with which to craft a scathing critique without resorting to slang.

While I am (I think) in agreement with you, this is one of the most obfuscatory (your word) articles I have looked at on NC for awhile. Preaching to the choir is one thing (I am, after all, in that choir), but all that grammatical analysis that morphs into economic analysis may be cute but is just unnecessary. Please write more clearly next time!

Lambert’s walk through is very similar to modern work on argument. We tend to avoid best argument and just do easy ones with obvious “evidence”, which is pretty dumb as data and theory spin together and there is no neutral observation language. Markets equate with ‘suck it and see’. Neo-liberalism is well over 2000 years old. It’s essence is lying. Machiavelli described it well. You say a pile of liberal ‘dulldung’ in public expressing your princely virtue and act as a ruthless bastard behind the scenes, trading on insider information and keeping savage attack dogs fed with the profits. Virtue ethics are extensively taught to an elite cadre in a system supported by slaves. Honesty is the best policy is taught alongside the need to lawyer up and deceive the enemy with clever strategies. You really are a decent person but have to fight the shameless enemy on her own terms.

Neo-liberalism is profoundly non-scientific and non-modern. Even if markets were real, we would want to do experiments that didn’t ground out in them to find out how to change or maintain them. I’m afraid those of us who know E = MC2 isn’t very important in relativity (excellent link the other day) rarely get arsed with economics and politics. They just aren’t where we’d start to try and get a reasonable society going, given the chance. And both lack the show and tell we like.

A major ruse in neo-liberalism is to turn arguments about change into fantasies requiring a totally remodelled world-view. I know Kuhn used the term paradigm in this sense, but he’d stuffed that before his second edition and was talking ‘disciplinary matrices’, which wasn’t half as catchy. This ruse disguises the fact that most critique really just asks ‘where’s your evidence’? In primitive societies, there is more murder than civilisation can match through war, at least before some clown pops off a hydrogen bomb or biological wizardry. Do we leave murder to Mr Market? There are many other examples we don’t cede to market throws of the dice.

Neo-liberalism works by shouting loud. It might do us good to work out what our role in the performance of the Naked Emperor is. Drowning out the voice of the child shouting he is naked with clever critique?

“That donut cost her 27 baht — 84¢, 5¢ more than the US, in a city with half the cost-of-living of New York! So, what’s going on? To her, Krispy Kreme donuts are a luxury good. How does she know that?”

The cost of living has little to nothing to do with if the cost to produce, sell, and profit from a Krispy Kreme donut in Thailand vs NYC. This is either the same terrible critical thinking skills you accuse the neo-liberals of possessing or easily dismissible sophistry.

The demand curve is a good starting point for discussing Economics because it starts the conversation about what really goes into the price of a good and the cost/willingness of its consumption.

Yes you do Lambert. So do I. We just mark our own these days. Important to say critique doesn’t need an alternative. Sadly, you have not slain the neo-blobby dragon and it will be round for the rent tomorrow. Somehow we need to trick it into a knife fight when we have pistols. One of the neo-clogger gun batteries is this ‘what’s your alternative’ stuff. We should not go Light Brigade. The truth here is they prevent alternatives and practise sacking raids on any established.

It would be interesting to see speculation in here concerning what life would be like with guaranteed income set at three squares and a roof over one’s head. I’m particularly interested in employee relations and what real motivation to work is.

And the sale price of a donut has nothing necessarily to do with the cost of production and sales, so long as there is a sufficiently fashionable level of profit in doing so. Anecdotal evidence still beats a priori assertion.

And furthermore, “presenting an alternate” is simply abrogation of responsibility in the form of a romantic prayer, most often deployed by those whose social identity and/or access to power are directly or indirectly threatened by the criticial analysis in progress.

The supply-demand diagram as shown is inaccurate. As such it is an effective demonstration of lying by omission.

To correctly model real-world markets it needs to show how the supply and demand curves are shifted through industry collusion, improper government mandates, and other market distortions and manipulations. It needs to show how prices are increased through market inefficiencies and how economic rent is contrived. It needs to demonstrate the differences between a non-profit utilitarian system, a competitive system that allows for a normal profit, and one that is perverted to enable rent extraction.

The diagram as shown doesn’t do any of these things, and a corporate con artist who tries to fob off such a thing on you needs to be taken to school about their ignorance of economics and their propensity for blatant dishonesty and thievery. You certainly don’t want such a pirate to get away with using the Blinding With Science fallacy on you when it’s fairly straightforward to expose the lying for what it is with just a little standard explanatory material.

I’ve heard the “narcissism of small differences” theory before but I don’t think I buy it. The differences are large, but they’re the Yankee/Cowboy War differences detailed by Oglesby, not a disagreement over any of the main points of the Washington Consensus..

The war between the Eastern Establishment and the Cowboy Capitalists largely ended when the factions called a truce in 1980 and put Bush and Reagan on the ticket. Since then the transnational globalizing elite have pretty much buried those old cohorts or coopted them. The Tea Party and Fox News are the last refuges of the Cowboys, along with the nitwits at Commentary. But I think that the biggest players no longer see the United States as the exclusive or even primary stage on which capital is to be accumulated and deployed. America now functions primarily as rent collector and strike breaker.

Rule 2 reminds me of the title of H Rap Brown’s autobiography, written fifty years ago.

“I lived near Louisiana State University, and I could see this big fine school with modern buildings and it was for whites. Then there was Southern University, which was about to fall in and that was for the niggers. And when I compared the two, the message that the white man was trying to get across was obvious…Die Nigger Die.”